Fiskars Oyj Abp

Hello and welcome to Fiskars Group's Q3 results webcast. My name is Essi Lipponen and I'm the Director of Investor Relations. I'm here with our President and CEO, Jyri Luomakoski, and our CFO, Jussi Siitonen.

Hello.

Here is our agenda for this webcast. Jyri will start with key takeaways of the quarter. After that, Jussi will walk us through the financials. And then back to Jyri for business area specific performance and guidance. After the presentation, we will have plenty of time for your questions. We will take questions both through the phone line and through the chat. You can type in your questions in the chat already during the presentation. Before diving deeper into Q3, I still wanted to highlight the news that we shared last week. Jyri Luomakoski has been appointed as the president and CEO of Viskard Corporation, following his interim role in the same position. But with this piece of information, I will hand over to you, Jyri.

Thank you, Esther. It's a pleasure being here. If the numbers would be better, the pleasure would be even bigger. But let's go into the quarter. Key takeaways, some things went well and some clearly less good. And if we start with the positive ones, our net sales turned to growth and this was very much driven by several of our Vita brands, actually most of our Vita brands. And Vita grew in Q3 in the magnitude of 8%. The other positive thing is that we had actually a solid growth in the US. The market, which has been in some kind of a turmoil as a consequence of the tariffs, consumers becoming uncertain what's happening there. It seems that our value proposition to the consumers has been such that it's continued to appeal and we've had good development there. What didn't go well is certainly the decline of our comparable EBITDA in the quarter, and this is much driven by our additional costs in the supply chain, and many of them are self-inflicted. Why? Last year the inventories started to grow and that was still happening in the beginning of this year in our BA Viitta and we started very determined actions to take down the inventory levels by curtailing production. As a consequence, when you curtail production, your supply chain costs are partly fixed and there is less volume to absorb those costs. So it was a kind of a premeditated action from our side to prefer cash flow and go into 26 without too much of excess baggage from the inventories. I will soon come back when we get to the BA updates, but in our Fiskars business area, the innovation pipeline actually over the last year and a half or so has been more than doubled. And that's very important to stay relevant to the consumers, but soon getting back to that. And then as a consequence of this, we specified actually our guidance comparable EBIT range was narrowed to 90 to 100 million from the 90 to 110 million and currently as we see the market picture that is pointing us to the lower end of that range for the comparable EBIT for 2025. Handing over to Jussi, please.

Thank you, Juri, and hello, everyone. So I continue with this positive news, what we had in Q3, a top-line growth, solid 4.1% growth, so that Viitta was up 8.2, and then Fiscus BA came down slightly 0.9% negative there. Actually, this is the first quarter since Q2 2022, when we were able to deliver this kind of mid-single-digit solid growth. There are a couple of good news also where this growth is coming. So the fundamentals are in place. It was very broad based. If we take our top 15 countries, which represent more than 90% of our sales, 12 out of 15 countries were growing in Q3. Also same for brands. If we take our top 12 brands, 97% of sales, 10 out of 12 brands were also growing in Q3. So it was very broad based. EBIT, 13.9 million, came down 10.4 million from last year for two main reasons. Jyri already mentioned the supply chain issue, what we have there of under-absorption of fixed cost when it comes to our production volumes. Another one is our SG&A cost. When it comes to SG&A part, it's mainly phasing between Q3 and Q4. On gross margin, 46%. 7 million, it was down 140 basis points from last year, so that Viitta was down 380 basis points, 3.8 percentage points there. And Fiskars BA was actually up 110 basis points. On cash flow, and I will go a bit deeper to that after a couple of slides, it was up from last year, probably 7 million, but still negative of 10 million. If we dive a bit deeper about this EBIT bridge here and where the differences from last year were coming from. So as I said, Group was down this 10.4 million, so that Vita was down 7.5 and Viscous was down 1 million. The rest is from other operations there. Focusing first what we have here on the right, i.e. Viscous BA. So you can see that underlying gross margin was quite significantly up there and only partially offset by tariffs. So the actions we have put in place, as we said after Q2, are now impacting positive results there and are mitigating the tariffs impacts in Fiscus BA. Same what I mentioned already about SG&A, you can see here. So Fiscus BA, SG&A slightly up versus last year, but that's also mainly phasing. On the middle, you can see Viitta Bridge, which is down to 7.5 million, as I said. Here you can see the impact of this supply chain challenge, what Jyri explained. So that was one big driver there. And also in Viitta, it's mainly SG&A phasing what we have there, showing quite strong negative numbers in Q3, but we assume, based on what we have seen, that that will be somewhat offset in Q4. Overall, when we are talking about SG&A here, I would say that year-to-day SG&A, which is flat versus last year, it's better proxy for full year than just looking at our Q3 numbers. And then, of course, group, as a summary of those two, BA is down to 10.4. So that even at the group level, our underlying gross margin was improving. But then, as a total, it was more than offset by those tariffs. Moving then to cash flow, as I said, cash flow was negative 10.2 million here, even though it improved from last year, it was still negative. And of course, this is the topic we are not very happy with. The actions we have been putting in place, or already put in place, or Jyri also explained here, are the ones we are focusing now also for the rest of the year, 2026, to get cash flow back on track. Here you can see the impact. I would focus more on year-to-date cash flow here to avoid this kind of seasonal volatility. The challenge what we have is well illustrated here. Inventory is up some 46 million, whilst last year for the same first nine months period, it was down similar type of numbers. So we had significant delta, negative delta there when it comes to our inventory situation. And then, quite naturally, being a component of net debt and EBITDA, when net debt continued increasing due to this negative cash flow as a main single reason there, and then that we are behind last year with EBITDA. The fact is that net EBITDA went up from last year, being now 3.7x. Our target, maximum 2.5x, is still valid, and we remain committed to this target. And therefore, this one example, why we have initiated those actions to mitigate inventory inflow and make sure that actually we get back on track with this NetADVDA. But with that, giving back to you, Jyri, on VAs.

Thank you, Jussi. And briefly on our two business areas, starting with Viitta, which is approaching its annual high season, which is the fourth quarter. And here we've seen, as earlier mentioned, a broad-based net sales growth. So if 10 out of the 12 top brands are growing, that I think we can call a broad-based and geographically also broad-based. It's not just one market which is booming and the others not performing. And the inventory-related actions we've touched quite much upon. And when we look at the growth and Jussi mentioned it several years back when the group was reporting this magnitude of growth numbers and I think it's over two years. You need to look back till you saw a growth quarter in Viita. This is extremely important for us driving our performance that we have the underlying growth. I've used a kind of a comparison or parallel to steer a ship that does not have any propulsion is very difficult and the same applies to a company growth being kind of the propulsion for the business too. Actions that we started to look upon in the summer already recognizing the inventory levels that the only way to solve the two big inventory issues really to curtail the inflow and of course start to boost the outflow. When you look at the comparable EBIT margin, really the big delta is coming from the supply chain aspect and the phasing related SGMA. The underlying, preempting maybe a very logical question that would be arising out of the numbers, the underlying cross-margin or in terms of pricing, we do not see anything that would be alarming us. And that's extremely important. So when we have the propulsion, i.e. growth, and the brands are loved by the consumers, then I think we have the ingredients to improve our position. And that's what the guidance also implies. A few highlights, leveraging our production assets in the more complicated glass production, which economically, industrial logic is more of a process industry logic. Royal Copenhagen, one of our biggest brands, very successful brand, has now actually, next to the hand-painted porcelain, launched also high-end glassware with crystal and mouth-blown glass. And those are manufactured in our crystal factory in Rogaska in Slovenia and in our Itala factory in Finland. So good both for the supply and complementing the offering towards our consumers to have a complete Royal Copenhagen tableware and glassware set. Iittala has expanded now to the scented candles. And when you look at those before you even light them up, you see a form or shape that we all can recognize. So it's the aalto silhuett. And this is something that appeals as a decoration item. And now getting into the darker, less light time of the year, what is then nicer than having a beautiful scented candle lighted up, and you can enjoy all the effects. And actually, the fire is bringing one of those, it's the elements of glass that are the three scents, water and sand and air, that are in this offering. When we talk about desirable brands, you might recall that historically, and I still read in many reports, about luxury. We have actively dropped the word luxury. We recognize that to be luxury, there are certain characteristics that many of our brands actually would fulfill, but not all of them. But our brands are very desirable. And one of the kind of manifests to that desirability, Moomin Day, in the early August timeframe, it was a few days, a few hours online. We actually sold out the Moomin Day celebration mug. When the sale started, there were about 50,000 people queuing online. And interesting, when I bypassed our store at the Helsinki airport, at the Schengen side, the store opens at 5 a.m. Normally, our stores open at 9, and at 5 a.m., according to our colleagues there, actually, there was a queue outside of that. So, there were some happy ones who got four hours before others their Moomin Day mug. So, I think that's a clear manifest to the desirability of a brand, but describes what we have in many of our brands. Moving over to Fisker's business area, relatively stable top line. And as you saw in the EBIT bridges you just showed, the gross margin improvement and the incremental tariff costs have been pretty well matching each other. which is a remarkable achievement by the team in terms of managing the situation, which is complicated. It's still a fluid situation, as we know. Tariff announcements are still in the air, and how some of them will settle, we don't know yet. But a decrease of 0.9%, and when I look at many peer companies who have recently published published their numbers. I think we've been weathering this storm extremely well and implicitly indicates, and I don't have the proof in any formal statistics, but indicates that we've been actually able to capture some market share and have remained definitely relevant to our consumers. In terms of how to capture the market share, there are a few keys, but one of them is also continued distribution gains, which we also see that we still have a clear pipeline of distribution gains coming for this business. Looking at the highlights, many know Fiskars as either the scissor or the axe or the garden business. Now, here highlighting the latest generation, the Fiskars Ultra-Axe range, which is, again, how the world's best axes have been made even better. And, dare we say, established heritage and know-how. And this is a product family now we all are proud of having been able to launch it. Innovation focus. As I mentioned earlier, our Fiskars business area has more than doubled its innovation pipeline in the last 20 months. And this is not only nice pictures and promises on November 11, Actually, we are arranging for institutional investors and analysts an investor event that will be then broadcast or webcasted, get to know business area Fiskars. Last spring, we had a similar event in Copenhagen for our BA Vita and the feedback from analysts covering us, some fund managers. attending that was very positive, that we really show what we are doing, who is doing it, and we are proud to show what will be there, available soon also in the stores, coming out of the innovation pipeline. So it's not only talk, but there will be a chance to get the look and feel and the touch of these new products that are coming, partly later this year, partly in the coming year. Our sustainability targets, we take them extremely serious and continue our commitment there. And when we look at certain environmental criteria, circular products and services, we've been able to grow the share by 300 basis points from last year's September level of last year's first nine months. But there is still a way to go towards our 2030 target, that half of our sales comes from circular products and services. What might not look too ambitious currently is when we have reached minus 61% on our scope one and two emissions from our own operations, seven percentage points improvement year on year. The target was 60, so it looks quite favorable that we are reaching, actually have now reached that target. Then how to tackle our, the fact our scope three emissions is defined by us as a percentage of suppliers spend, how many percent have spent to vendors who have committed to science-based targets. And then we've been moving sideways and still have some way to go towards our target. So we are currently at 65%. And in our H1 reporting in that context, we also flagged out that the rebasing of some of the sourcing for our US business might actually take us a small step back short term before the new vendors can be qualified and submit their science-based targets. But it's not a target that we want to give away. On the social side, the zero harm target remains in force. We have three and a half, as our lost time accident frequency per million, hours worked. It is a notch up from a number of years ago, which is very unfortunate, but the work continues. Health and safety of our people is extremely important to us. And then finally, inclusion experience. We have a target in a comparison with global high-performing companies of 80, and we are currently kind of moving sideways, just shy of that 80 at 77, so not yet there. Split of our businesses, our BAs or separation into subsidiaries is advancing. The legal entity structure will be, in our current assessment, finalized by the end of first quarter 26. The operational structure has been in force since last spring, but that's kind of the relatively easy part of it. We are operating in about 30 countries. have had more than 30 legal entities and then having those split and put under basically subgroups for the Fiskars BI and for the Vita BI under the holding company, which is Fiskars Corporation, the parent company. So that work is ongoing. We had the first wave of a number of countries that went well because that has to do also with IT things etc. The next one is beginning of November and this step by step we will get there by the end of the first quarter. What do we want to achieve with this separation? Of course full business accountability. So we have Two colleagues who are running these two business areas, and they have operational end-to-end accountability for their business. So there is no scapegoat of a group supply chain. They could say that we would have sold, but the factories didn't deliver, etc. So it's all under one hat, which improves flexibility. It improves the speed of decision-making. The closer to the consumer we are, making decisions, I think the more relevant they are and more timely they are. The independent legal entities as subgroups under the holding company, that's very self-evident. Then when we talk about the transparency and measurability, Once this is completed, we have already committed to the financial markets that we can provide, and we will provide more transparency into the numbers. Currently, we have the income statement pretty well already covered by BA, but not the entire balance sheets. So there is potential. And by transparency, we hope that these individual businesses are also getting with their different type of characteristics in terms of financial dynamics and asset utilization, et cetera. The fair valuation, which then is reflected into the aggregate, basically some of the parts as fiscal groups valuation. And when we have this structure, there's definitely a different level of dedication. And this is to accelerate, of course, to tap to the growth opportunities into which these two businesses have available to them. In terms of the guidance, already addressed it in the very beginning, we narrowed down the range. and also openly pointed out that we have the most important quarter of the year ahead of us, and the current visibility indicates more towards the lower end of the range. I know that many analysts have calculated what does it imply in terms of growth in the fourth quarter that is needed to achieve these numbers. And I'm happy to share that while we do not share regularly kind of mid-quarter or monthly business updates or anything like that. But as of today, having the visibility how sales has progressed also in October, i.e. the fourth quarter has started, that has been well consistent with the expectations and projections that are needed to get there. Consumers make the decision. And actually, it will be after New Year's Eve, when we close the stores, when we actually will in the end know how the fourth quarter went. Our D2C share increased a notch in the third quarter, and traditionally the fourth quarter is more direct-to-consumer heavy, so both our own ecom and our stores play a relatively seen bigger role, which means that the visibility is really at the point of sale that takes place. We have in the background certain assumptions and definitely actions also and those relate to the supply chain variances which we have addressed. Those two published factory curtailments or mothballing as somebody would call them are both related to 90 days furloughs and that means that they will span also into the fourth quarter The direct tariff impacts are way easier to calculate. Of course, the indirect impacts on demand is very much then visible again on the point of sale. And we expect this VITAS positive net sales trend to continue in the fourth quarter. And as I mentioned, We are on track on that. And the tariff mitigation efforts continue as some parts of the tariff landscape are still effectively open. So in brief summary, what is really delightful here is that we've returned back to growth. especially the Vita part, and this is the time of the year where that growth is relevant and super needed. And the US, where we've had certainly many aches and pains with the very volatile tariff situation, we've remained relevant and been able to remain relevant also to our customers, i.e. the distribution. and gained some more traction on that side. The actions to reduce inventories, they continue. It is not acceptable from my perspective to see inventory numbers as we currently have, and that's something we need to fix. Innovation pipeline, more on that in a few weeks, and guidance I already touched. And relating to a guidance longer-term topic, last spring when I took over as interim CEO, there was a date penciled into the calendar in this autumn for a capital markets day. We all know that our long-term financial targets are basically expiring end of this year. That's clearly recognized. But at that time, I personally felt that it would not be right to go out and make promises about the future, and then somebody else might be then bailing out those promises. That's not the style we want to kind of enforce in our company. In H1 26, we will arrange a capital markets day. The timing is still open. And in that connection, we also plan to issue then our new long-term financial targets. So this assay promise, and now being able to bail out those promises, it feels way better to be standing here and announcing this, and we will be back on the timing of this. That concludes my part of the presentation. So thank you for your attention so far, and we are Shifting to the Q&A session, I guess.

Yes. And let's first take questions through the phone line. But if you want to ask questions through the chat, just please write your questions in and we will take them afterwards. But let's see if we have any questions through the phone line.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Kaie Loikanen from Danske Bank. Please go ahead.

Yeah. Hi. Hi, everyone. Thank you for taking my question. And first off, Congrats, Jyri, on the new appointment. I have a few questions. If I take them one by one. First, in Viita, the inventory-related actions and the scaling down of production, for how long will this continue to impact profitability?

As I said, the current announced furloughs are 90 days furloughs, and with regards to Ballaston, that's a 90-day block, kind of a monoblock, I would say, and with respect to Itala, it's phased, and part of that is in 2025, and part of that will be in the winter season of 2026. and we are of course continuously looking at do we see the development. We had a notch of inventory reduction now in Viitta already in Q3 with the bigger demand anticipated in Q4. Of course we expect more and it is very much a steering where we want to clear the baggage from the past, have a clear slate forward for the business and manage the cash flow and implicitly through that also the indebtedness or the net debt position. So timing, difficult to say, but it's not ending in Q4 already based on what we have announced with respect to Itala.

Okay, but you... You're not expecting a similar kind of impact on EBIT anymore from these actions as we saw in Q3?

Into our guidance, we have certainly factored in what we know for the actions for this current year. and at this stage we are not yet going to guide any income statement or any other element of 26. So we are managing that situation diligently and carefully balancing between the cash flow optimization and of course we are in the business of making profits and delivering profits and that's even our legal obligation to do that and manage the situation between these two aspects.

Yes, okay, got it. And then secondly, I mean, now looking at year-to-date adjusted EBIT, 46 million roughly. So you need about 44 million in Q4 to reach the lower end of the guidance. And last year you did 43 million of EBIT in Q4. So in practice, you need know three million more now in q4 um and and um so i was just wondering i mean you mentioned that you expect vita to continue to grow uh top line uh in in q4 which which should uh should of course help um and and uh but but i was wondering i mean if you have these these still these kind of inventory related actions ongoing uh probably a bit of you know negative ebit coming in in from those or at least negative impact on EBIT. So can you elaborate a bit, perhaps more in detail, on what levers there are for you to grow EBIT in Q4 to really reach the guidance?

Two critical aspects. Of course, the top-line growth, as indicated, is vital for that. That's the prerequisite. With respect to the... cost side. SG&A, where we had an uplift in Q3, which relates to phasing, relates to some accruals, how they were accrued last year, comparing year on year, and some accruals when like with respect to variable compensation, short-term incentives, etc. Apparently, and I was not there in this role, but as a former audit committee chair, I do remember some of the facts from the history. When the visibility went a bit sour last year, some of those were reversed, creating a benefit into last year's Q3. which makes the current comparison also somewhat unfair in terms of the Vita Q3 EBIT performance, and that type of an ugly comparison doesn't reoccur in Q4. So it's revenues and costs, which I know sounds like a very simplistic answer, but they are very targeted. And of course, we are careful and very cautious in terms of other costs and expenditures in the fourth quarter.

Okay, thanks. That's very helpful. And then lastly, before handing over to others, and I know there's still plenty to do this year, but what sort of initial thoughts do you have for 2026? Anything that you kind of are looking forward to or expecting from next year?

Next year we hope that there will be a kind of stabilization of the tariff situation because now it's been waking up in the morning and checking the social media what is the new situation and that's been keeping our organization extremely busy. That's also time off the consumers and customers. It's time that has been spent in rebasing our sourcing and relates now to the US fiscars business predominantly. The team has done a tremendous job in terms of finding new sources, qualifying them, testing them and negotiating that we can move and base our sourcing into already settled down tariff environments and so forth. So that's the only part actually given that we will issue our 26 guidance in early February in connection with our Q4 fully reporting that I can share at this stage. But that remains like a wish that we could concentrate on some more productive or progressive topics instead of fighting the situation here.

Okay. Okay. Makes sense. Thank you very much. That's all for me.

The next question comes from Maria Wickstrom from SEB. Please go ahead.

Yes, thank you. Maybe continue a bit with the topic that Kalle raised as well. So, I mean, just getting a little bit more color, I mean, as Q4, I mean, your guidance, I mean, reaching the low end of the range indicates that you need to record, I mean, some 8% growth in the EBIT, which in light of, I mean, today's results, I mean, something needs to change. But it's, I mean, it's a thinking, right, that, I mean, given that it seems that in the FISCAR BA, I mean, you have been able to to get these price increases through and the EBIT is stabilizing, more stabilizing year over year. So the list that we are going to see, we would need to see is coming from the VITPA segment. And then here, I mean, you think that the Q3 was somewhat extraordinary, so it should be better in the high season. Is that, I mean, rightly summed up?

Hi, Mario. So college math worked well. So if we take our year-to-date numbers here, you can see that we are 25 million behind last year when it comes to EBIT on the first nine months. Making our guidance, we need to be roughly 5 million better than last year in Q4. What I said in my part here is that we have some technical tailwind there coming from HG&A phasing. So therefore, I would say... Year-to-date change in EBITDA would be better proxy to give direction there for full year SCNA. So you can figure out how much technical upside we are expecting there. And then exactly like Jyri said here, we do need We do need demand, which as of today looks pretty good there for Vita, that we are following the plans, what we had in place. And then when we are prioritizing the cash flow here, so the decisions are very much ours here, what to do with production to ensure that we can continue improving cash flow. So these are the items what we have in place. This time Q4 is a bit different from last year. So you might remember last year, We were struggling with demand when it comes to Q4. I would say at the very moment, we have one problem less versus last year. And then we have this kind of technical tailwinds. But as I said, all this needs to work very much well in plans, what we currently have to make the guidance.

And your analysis on BA Fisker's role in the fourth quarter is also correct. It's not really the gardening season. Yes, some craft things happen for the holiday season. And of course, from our perspective, we wish a lot of snow to the Nordic countries. The snow season is always something we are cheering while the traffic in the cities is kind of not happy about snow.

Perfect. This is very helpful. And then I wanted to touch on the geographical sales development. It seems that the demand is better in America as well as in the Asia segment, whereas Europe is still lagging behind. Is there any lead indicators or some bright spots which would indicate that Europe will join the crowd when it comes to the demand? Or do you see that Europe is likely to remain muted also for the last quarter?

Of world economy, Europe does not currently have a big contributing factor to world economic growth and consumers in Europe are typically more cautious than in many other geographies. In the Nordics, we've had a good tailwind with our Vita business. So when we commented broad-based, both brands and market-wise, so Nordics, we have been able to remain very relevant and very much a desired way to bring some joy and making the everyday extraordinary with our products. But your analysis is correct that it's both North America, US especially, and Asia where the consumers are more happy to consume.

And then finally, touching upon the tariff situation and your mitigating actions, personally, I was very surprised how well you were able to get the price increases through for the Fiscars segment during the Q3. So would you say that the tariff risk has now winded down, or is there still many unknowns that we should consider as a risk going forward.

Yes, we are very pleased with the Fiscus BA team here, how they have succeeded to mitigate those tariffs. As you might remember, we got some extra burden there late August when those steel tariffs came in, and we are still mitigating also those there. We are now living the last two weeks, if I'm right, this last 90-day extension, which is given to Chinese tariff. So let's see where it goes after 8th of November there. So no one knows at the moment. So we are, as Jyri mentioned, following on daily basis what's the current mood when it comes to tariffs and trying to tackle it. More fundamental based actions we have put in place, price increases are only part of this story, mainly focusing on our own footprint, what we have in sourcing there to find alternatives for those high-tariff countries, how we are able able to make some re-footprinting in that sense. So can't promise that we have tackled all the problems because we don't know them, but as the ones we know at the very moment, we are very pleased with our BA Fiscus execution capability.

And with respect to the re-footprinting that implies basically products that we have historically sourced out of China, we have qualified suppliers brought tooling into some of the neighboring countries, which already have settled down tariff deals with the United States. And those tariffs are clearly at a lower level than the current China tariffs are, and gives a kind of a planning horizon for us going forward.

Thank you. And then I had one more question in mind. which reflects to the Gerber division. As I recall, Gerber was the one that had faced some difficulties or faced lower demand during the summer period. So what are currently the trends you are specifically seeing for the Gerber brand in the U.S.? ?

Gerber has been hit in some geographies by restrictions whether you can advertise knives or multi-tools which are then qualified also as knives because they are in some jurisdictions like weapons and from that perspective the push towards the consumers has been a more difficult struggle. Our efforts and I visited in the summer Portland and the Gerber team, similarly as in the rest of Fiskars BA, innovation and remaining relevant to the consumer is extremely important and I think it's fair to say that we have neglected that. It's been a few years where we haven't had too much of innovation flow, new products, and happy to see that that pipeline is also well equipped with new ways to charm the consumer, to have the outdoor people, the fishermen and the women and the hunters and campers and all those with new neat stuff equipped and that is the key to tackle this issue. So what we can't advertise in public or what needs to go beyond a locked cabinet in an outdoor store in some states in the US, we have now other ways in the pipeline to make us relevant and, again, wanted.

Maria, when I said that 10 out of 12 brands were growing in Q3, Gerber was one of the growing ones there in Q3.

Perfect. Thank you very much. I don't have further questions.

Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Yes, we do have questions in the chat. Thank you, Kalle and Maria, for the questions through the phone. But maybe if we start with the question related to top line. And Jyri, if you take this one, was there any impact of timing between quarters supporting the top line development in Q3?

Not that I'm aware. We have... Potentially, between Q2 and Q3, we have the load-ins for the back-to-school season in North America. That's traditionally been something that either happens last week of June or first weeks of July, and then you get big swings. But we are not here in that type of a phasing. The holiday season load-ins, which holiday season is reminding for Viitta, Less than half of our sales is through distribution, more than half is through our D2C channels. Those load-ins are happening now in October anyhow, so those have not been moved forward to September. No signs of that.

Great. Let's see what we have next. Related to production, maybe Jyri, if you can continue. Given the current demand situation and production curtailments, how do you view the current production footprint, especially in Viitta? Are you considering any adjustments?

A prudent and careful manager of a business always considers adjustments. I know this is kind of a rounded answer, but that's our obligation to see how we can best perform and serve our customers and in the end make money for the company. Those always being in the background, but now here in terms of some concrete that there is a site that we would need to kind of permanently mothball or so, such plans are currently not on the table. And of course, demand situation is dictating. We are here for the customers, for the consumers. That's dictating, in the end, the footprint, how we are set up and how we operate that.

Thank you. maybe usually related to working capital and inventories. How large a working capital release are you expecting in Q4? Have you considered other actions than reducing inventories?

Well, following our historical pattern, what we typically have had in Q4 is that working capital is coming down and typically cash flow has been improving versus Q3 and Q4. Is it happening now? We can't confirm it yet. The actions we have put in place at the moment are exactly the ones Jyri already explained there. with a high priority target of continue reducing inventories. This inventory challenge is very much on Viitta side, less on Fiskos side.

Yes. And maybe to both of you, but maybe if Jyri starts, when comparing Q4 and Q3, are you expecting higher under absorption of fixed costs in Viitta related to the inventory?

We have implicitly guided for Q4 the EBIT or comparable EBIT number, not individual line items and not individual line items within our cost of goods sold where the supply chain variances would be ending. Certainly we have our plans how and we will operate our different production sites during the fourth quarter Based on that calculated and factored into the mathematics, we have arrived at our forecasts, which are supportive of our guidance.

Great. Then about tariffs, Yusif, you start. Given the US tariffs and additional steel tariffs, how much headwind are you expecting for 2026 and how much of these have you been able to mitigate as of now?

Steel tariffs, as I said, is something new there, started or announced in late August. So there, the steel tariffs impact is mainly in 2026, while the other tariffs that we have for countries specific, they have been already since April this year. So there, this kind of year-on-year change is not expected to be significant. So it's mainly the new one, i.e. steel tariffs impacting more in 2026 than in 2025. We haven't announced any specific numbers, how much they are impacting, what's the direct impact of tariffs on our gross margin. Only say that when it comes to direct impacts there, we do have toolbox to mitigate them, including this free-for-printing, what we are referring, prices and the likes. And of course, we are now looking for category expansions there when it comes to offering what we have, which would also help to create new demand and therefore tackling it not only by cutting costs, but also expanding our portfolio and top line there. So toolbox is quite broad. How much is still left for 2006? That we haven't yet commented.

We still have a couple of questions and let's see if there are any new ones coming. It might be that we have already covered this, but maybe just to remind, how quickly can inventory levels in Viitta be normalized? If you really want to comment on that.

It is not a sprint. It consists of two factors. One is the one which is more really in our control, and that's curtailing the supply or the input into the inventories, both relating to sourced items and own manufacturing. And those we can tackle, and those we have started to tackle very clearly. At the same time, the output from inventories, so clearing, clearance sales type of topics, That's also needed. Now we are heading to the seasons where you have, as we know, the Black Fridays of this world. They are to some extent also created for clearing some inventories, but it's definitely not done in the fourth quarter of this year. It's not a marathon, but it's still long distance. activity that we have there. So working on both ends, input and the output. And as we progress, the output of course requires always the willing purchaser, consumer or distributor. And once we have more to share on that front too, not only those actions that are under our control, we will of course be back and updating on those.

Thank you. And then maybe the final question for Jussi. With net debt at over 600 million and leverage at 3.7x, what is the deleveraging plan for 2026?

Very good point. First of all, it's just an outcome what you just explained. So that's the main driver there. What we have on short term, and then I'm moving to 2026, typically, historically, we have to come down when it comes to net EBITDA, it was to end of the year after Q3. So that's our historical pattern there. More important than how much we are now coming down is to turn the trend. So we need to get the declining trend there when it comes to our net debt EBITDA and then impacting on both components there, net debt and then improving our EBITDA. I'm not expecting any rapid overnight improvement there. As I said, more important is now to have fundamentals in place to turn the trend, getting it on the lowering trend there. And then what we said that this max 2.5x net EBITDA remains our target. It might take a bit more time than probably someone might expect to get it there, but it clearly remains our target.

And we work in a very determined way on both elements of this EBITDA and the net debt, where really the main lever is inventories.

Thank you. It seems that we are out of questions. So thank you for the active participation and I wish you all a nice end of the week.

Thank you very much for joining and happy shopping in the year-end holiday and gifting season.

Thank you.